Digital twin

2018 Budget’s Impact on the IT Sector

By: L. N. Ramakrishna, MD, Bodhtree Consulting Limited

There is a huge change that is witnessed across businesses essentially driven through technology advancements like AI, IoT, Big Data etc to name a few. India has the remarkable chance, like never before, to drive these developments for businesses over the globe. However it needs a deliberate push to encourage and develop talent across this area. The interest shown by the government in strengthening India’s position as a digital economy by investing in new age technologies and its advances through Digital India is clearly visible.

Having increased multifold its allocation to the Digital India scheme, the government is looking to heavily invest in R&D in new areas such as machine learning, artificial intelligence, and robotics. With the push for more engaged and relevant advanced education, these are exciting times for young Indians as consumers and enterprises alike to get ready to ride the automation wave

Arun Jaitely, Finance minister, presented the Union Budget today and made numerous announcements. Let’s see how the budget impacts the IT sector


  • The sector lauded Jaitley’s proposal to reduce corporate tax rate for companies with a turnover of less than Rs 250 crore. The move is expected to bolster MSMEs in the country.
  • A clear push towards AI, blockchain, Quantum computing, big data was noticeable
  • No weighted deduction under section 35 (2AB) for R&D activities to be extended to companies engaged in the development and sale of software or providing IT services
  • However the lack of uniform GST slabs for hardware and software continues to hassle OEMs and SIs.

Smart City Mission:

In this year’s budget, the Finance Minister has allotted Rs 2.04 lakh crore for Prime Minister Narendra Modi’s bold initiative –the 100 Smart City Mission, a major monetary boost to the selected 99 smart cities This could entice more technology companies to participate in the Smart City project and do business with the government organizations across the country.

According to the ministry, over 2,500 initiatives viz. smart roads, solar roof, intelligent transport system etc worth over Rs 20,850 crore are currently under progress and 189 projects amounting to around Rs 2,350 crore have been completed.

Blockchain Technology

Though, the Finance Minister announced a crackdown on crypto currencies by calling them “ill-legal” – he added that the government will look at leveraging block chain technology to boost the digital economy. This announcement will place India as one of the new markets for blockchain technology and solutions, creating greater interest among block chain technology companies and countries globally.

It could additionally open new ways of securing peer-to-peer lending transactions, boosting trade finance, fintech and information repository sectors.

Besides, the popular use case of block chain technology for crypto currencies, it has other use cases throughout industries that may deliver transparency, safety and higher performance in operations and enterprise functions.

Artificial Intelligence (AI):

 After Block chain Technology, AI is another technology area, where the FM has announced a key initiative during his budget speech. In tune with the announcement, Amitabh Kant, CEO – NITI (National Institution for Transforming India) Aayog has been given the responsibility to set up a national level program that will enable measurable efforts for AI and assist in leveraging AI technology and its applications for development works across the country.

Government’s initiative to increase research in artificial intelligence (AI) reinforces our belief that AI could revolutionize the manner in which the financial institutions and customers have interaction with each other. This would add a new dimension to the digital transformation of our economy and accelerate our march towards achieving a Digital India

Local Electronics Manufacturing:

 To propel the Make in India initiative and inspire electronics manufacturing in the country, the basic custom duty has been hiked to 20% . This move will push the costs of imported mobile phones and devices, making them highly priced for Indian buyers.

The hike in basic custom duty is also aimed to push and encourage mobile phone companies and brands like Apple to set up local production units, which will create local jobs and boost the domestic economy.

Overall, India’s IT and Electronics sector have hailed the tech driven initiatives announced by the Finance Minister during this year’s budget.

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